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ALAMO GROUP ANNOUNCES RECORD 2023 FOURTH QUARTER AND YEAR END RESULTS

2024-02-22 16:15 ET - News Release

SEGUIN, Texas, Feb. 22, 2024 /PRNewswire/ -- Alamo Group Inc. (NYSE: ALG) today reported results for the fourth quarter and year ended December 31, 2023.

Highlights

  • Ninth consecutive quarterly record for sales and earnings
  • Fourth quarter net sales of $417.5 million, up 8%
  • Fourth quarter operating income of $44.8 million, up 5%
  • Fourth quarter net income of $31.5 million, or $2.63 per diluted share, up 8%
  • Full year net sales of $1.69 billion, up 12%
  • Full year operating income of $198.0 million, up 33%
  • Full year net income of $136.2 million, up 34%
  • Full year diluted EPS was $11.36, up 33%
  • Record EBITDA of $246.6 million, up 26%
  • Year-end 2023 backlog at $860 million

Fourth Quarter Results

Fourth quarter 2023 net sales were $417.5 million compared to $386.6 million in the fourth quarter of 2022, an increase of 8%. Gross margin improved in the quarter versus the fourth quarter of 2022 by $11.1 million or 11%. Fourth quarter net income improved 8% to $31.5 million, or $2.63 per diluted share, compared to net income of $29.2 million, or $2.44 per diluted share in the fourth quarter of 2022. The Company's backlog at the end of 2023 was $860 million.

Full Year Results

Full year 2023 net sales increased to almost $1.7 billion, up 12% compared to $1.5 billion for the full year 2022. Gross margin for 2023 increased $77.1 million or 20% versus the full year 2022. Net income for 2023 was $136.2 million, or $11.36 per diluted share, compared to net income of $101.9 million, or $8.54 per diluted share in 2022, a year-over-year EPS improvement of 33%.

Comments on Results

Jeff Leonard, Alamo Group's President, and Chief Executive Officer, commented, "We are pleased that our fourth quarter results established new records for sales and earnings for the ninth consecutive quarter. The fourth quarter is normally seasonally softer for us, and this year was no exception as sales growth moderated relative to the pace set in the third quarter.

"It was great to see that our fourth quarter gross margin expanded by 80 basis points reflecting the durable quality of our backlog. Improvements in supply chain performance and labor availability drove operating efficiency higher and contributed to the favorable gross margin. The combined benefits of the higher gross margin and better operating efficiency were partially offset by higher employee-related administrative expenses during the quarter. Fourth quarter operating income of $44.8 million was five percent higher than the comparison period of 2022.

"The Industrial Equipment Division had a very strong fourth quarter with sales that were 32% higher than the fourth quarter of 2022. Governmental and industrial demand for this Division's products remained robust although order bookings were 9% lower due to a challenging comparable caused by an unusually large snow-removal equipment order that we received in the fourth quarter of 2022. Year-end backlog increased by 18% compared to 2022.

"The Vegetation Management Division faced challenging conditions in several of its markets in the fourth quarter. Forestry and Tree Care activity remained constrained by the combined effects of price pressure for domestic wood pellets, slowing demand for land clearing equipment and sluggish housing starts. The farm and ranch market also remained soft due to lower cattle prices, less favorable commodity prices and declining agricultural exports. Channel inventories remained above optimal levels in the fourth quarter and dealers were reluctant to place new stock orders while interest rates remained elevated. The bright spot in the Vegetation Management Division was its governmental mowing business which enjoyed very strong, historically high sales in the fourth quarter and for all of 2023. Vegetation Management Division fourth quarter order bookings declined 34% and year-end backlog was 39% lower compared to 2022. The Division's backlog has now returned to a more normal level from a historical perspective.

"The Company's solid performance in the fourth quarter capped a very strong performance in 2023. Full-year sales were up 12% and net income improved by 34% versus the prior year. As we expected, recent softness in several of the Vegetation Management Division's markets was largely offset by increasing demand for the Company's Industrial Equipment from governmental agencies and contractors. We continue to like the way the Company is positioned as we enter 2024. At nearly $860 million, the Company's backlog remains at a very healthy level and we believe that the quality of the backlog remains excellent. Although the noted softness in Vegetation Management may persist through the first quarter, anticipated relief in the form of modestly lower interest rates later in the year should help clear the inventory overhang and invigorate dealer demand. We expect that the Industrial Equipment Division will continue to display strength in 2024 driven by its sales to governmental agencies. Taken together, we remain confident regarding the Company's performance in 2024 and believe it will be another excellent year for us.

Earnings Conference Call

The Company will host a conference call to discuss fourth quarter and year end 2023 financial results on Friday, February 23, 2024 at 10:00 a.m. ET. Hosting the call will be members of senior management.

Individuals wishing to participate in the conference call should dial 877-317-6789 (domestic) or 412-317-6789 (international). For interested individuals unable to join the call, a replay will be available until Friday, March 01, 2024 by dialing 877-344-7529 (domestic) or 412-317-0088 (internationally), passcode 8022529.

The live broadcast of Alamo Group Inc.'s quarterly conference call will be available online at the Company's website, www.alamo-group.com (under "Investor Relations/Events & and Presentations") on Friday, February 23, 2024, beginning at 10:00 a.m. ET. The online replay will follow shortly after the call ends and will be archived on the Company's website for 60 days.

About Alamo Group

Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for vegetation management, infrastructure maintenance and other applications. Our products include truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, other industrial equipment, agricultural implements, forestry equipment and related after-market parts and services. The Company, founded in 1969, has approximately 4,350 employees and operates 29 plants in North America, Europe, Australia and Brazil as of December 31, 2023. The corporate offices of Alamo Group Inc. are located in Seguin, Texas.

Forward Looking Statements

This release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following:adverse economic conditions which could lead to a reduction in overall market demand, supply chain disruptions, labor constraints, increasing costs due to inflation, disease outbreaks, geopolitical risks, including effects of the war in the Ukraine and the Middle East, competition, weather, seasonality, currency-related issues, and other risk factors listed from time to time in the Company's SEC reports. The Company does not undertake any obligation to update the information contained herein, which speaks only as of this date.

(Tables Follow)

# # #

(1) This is a non-GAAP financial measure or other information relating to our GAAP financial measures that we have provided to investors in order to allow greater transparency and a deeper understanding of our financial condition and operating results. For a reconciliation of the non-GAAP financial measure or for a more detailed explanation of financial results, refer to "Non-GAAP Financial Measure Reconciliation" below and the Attachments thereto.

 

Alamo Group Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited) 





December 31,
2023

December 31,
2022

ASSETS







Current assets:







 Cash and cash equivalents


$         51,919



$         47,016


 Accounts receivable, net


362,007



317,581


 Inventories


377,480



352,553


 Other current assets


12,551



10,060


  Total current assets


803,957



727,210









Rental equipment, net


39,264



33,723









Property, plant and equipment


166,660



155,007









Goodwill


206,536



195,858


Intangible assets


168,296



171,341


Other non-current assets


24,673



25,369









Total assets


$    1,409,386



$    1,308,508









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







 Trade accounts payable


$         99,678



$         97,537


 Income taxes payable


12,529



6,592


 Accrued liabilities


86,711



71,368


 Current maturities of long-term debt and finance lease obligations


15,008



15,009


  Total current liabilities


213,926



190,506









 Long-term debt, net of current maturities


220,269



286,943


 Long term tax payable


2,634



3,781


 Other long-term liabilities


23,694



23,668


 Deferred income taxes


16,100



18,250









Total stockholders' equity


932,763



785,360









Total liabilities and stockholders' equity


$    1,409,386



$    1,308,508


 

Alamo Group Inc. and Subsidiaries 

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(Unaudited)






Fourth Quarter Ended


Year Ended


12/31/2023


12/31/2022


12/31/2023


12/31/2022

Net sales:








  Vegetation Management

$            214,357


$            232,545


$            979,040


$            937,065

  Industrial Equipment

203,185


154,059


710,611


576,551

  Total Net Sales

417,542


386,604


1,689,651


1,513,616









Cost of Sales

308,622


288,809


1,236,007


1,137,098

Gross Margin

108,920


97,795


453,644


376,518


26.1 %


25.3 %


26.8 %


24.9 %









Selling, general and administration expense

60,068


51,282


240,158


212,649

Amortization Expense

4,054


3,796


15,519


15,277

Income from Operations

44,798


42,717


197,967


148,592


10.7 %


11.0 %


11.7 %


9.8 %









Interest Expense

(6,587)


(4,791)


(26,093)


(14,361)

Interest Income

360


530


1,485


752

Other Income

1,667


(200)


1,761


(673)









Income before income taxes

40,238


38,256


175,120


134,310

Provision for income taxes

8,715


9,091


38,959


32,382









Net Income

$              31,523


$              29,165


$            136,161


$            101,928









Net Income per common share:
















Basic

$                   2.64


$                   2.45


$                 11.42


$                   8.58









Diluted

$                   2.63


$                   2.44


$                 11.36


$                   8.54









Average common shares:








Basic

11,930


11,884


11,920


11,877









Diluted

12,000


11,940


11,987


11,934

 

Alamo Group Inc.

Non-GAAP Financial Measures Reconciliation

From time to time, Alamo Group Inc. may disclose certain "non-GAAP financial measures" in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. For these purposes, "GAAP" refers to generally accepted accounting principles in the United States. The Securities and Exchange Commission (SEC) defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position, or cash flows that is subject to adjustments that effectively exclude or include amounts from the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Alamo Group are provided as additional information to investors in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

Attachment 1 discloses a non-GAAP financial presentation related to the impact of currency translation on net sales by division. Attachment 2 shows the net change in our total debt net of cash and earnings before interest, taxes, depreciation and amortization ("EBITDA") which is a non-GAAP financial measure. The Company considers this information useful to investors to allow better comparability of period-to-period operating performance. Attachment 3 reflects Division performance inclusive of non-GAAP financial measures such as backlog and earnings before interest, tax, depreciation and amortization ("EBITDA").

Attachment 1


Alamo Group Inc.

Non-GAAP Financial Reconciliation

(in thousands)

(Unaudited)


Impact of Currency Translation on Net Sales by Division












Three Months Ended

December 31,




Change due to currency
translation


2023


2022


% change
from 2022


$


%











Vegetation Management

$           214,357


$          232,545


(7.8) %


$                2,384


1.0 %

Industrial Equipment

203,185


154,059


31.9 %


861


0.6 %

   Total Net Sales

$           417,542


$          386,604


8.0 %


$                3,245


0.8 %
































Twelve Months Ended
December 31,




Change due to currency
translation


2023


2022


% change
from 2022


$


%











Vegetation Management

$           979,040


$          937,065


4.5 %


$                1,663


0.2 %

Industrial Equipment

710,611


576,551


23.3 %


(1,961)


(0.3) %

   Total Net Sales

$        1,689,651


$       1,513,616


11.6 %


$                 (298)


— %


 

Attachment 2


Alamo Group Inc.

Non-GAAP Financial Reconciliation

(in thousands)

(Unaudited)


Consolidated Net Change of Total Debt, Net of Cash










December 31,
2023


December 31,
2022


Net Change








Current maturities


$                   15,008


$                   15,009



Long-term debt, net of current


220,269


286,943



Total Debt


$                235,277


$                301,952










Total Cash


51,919


47,016



     Total Debt Net of Cash


$                183,358


$                254,936


$           71,578


 

EBITDA




Twelve Months Ended




December 31,
2023


December 31,
2022







Income from operations



$              197,967


$              148,592

Depreciation



32,454


31,412

Amortization



16,222


15,944

     EBITDA



$              246,643


$              195,948


 

Attachment 3


Alamo Group Inc.

Non-GAAP Financial Reconciliation

(in thousands)

(Unaudited)


Vegetation Management Division Performance












Three Months Ended

December 31,


Twelve Months Ended
   December 31,



2023


2022


2023


2022










Backlog






$     352,080


$      577,050










Net Sales


214,357


232,545


979,040


937,065










Income from Operations


19,764


30,247


122,084


108,508



9.2 %


13.0 %


12.5 %


11.6 %










Depreciation


4,246


4,470


15,581


15,188

Amortization


3,031


3,005


12,155


12,193










EBITDA


27,041


37,722


149,820


135,889



12.6 %


16.2 %


15.3 %


14.5 %



Industrial Equipment Division Performance












Three Months Ended

December 31,


Twelve Months Ended
   December 31,



2023


2022


2023


2022










Backlog






$      507,715


$      429,439










Net Sales


203,185


154,059


710,611


576,551










Income from Operations


25,034


12,470


75,883


40,084



12.3 %


8.1 %


10.7 %


7.0 %










Depreciation


4,534


4,970


16,873


16,224

Amortization


1,199


958


4,067


3,751










EBITDA


30,767


18,398


96,823


60,059



15.1 %


11.9 %


13.6 %


10.4 %

 

Cision View original content:https://www.prnewswire.com/news-releases/alamo-group-announces-record-2023-fourth-quarter-and-year-end-results-302069268.html

SOURCE Alamo Group Inc.

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